Do I Increase My Liability by Giving Warranties?
A lot of businesses think that if they give their customers a warranty, then they’re going to be increasing their liability. They’re afraid that they’ll get hung up on some unrealistic expectation and they’ll have to pay a bunch of money when they really haven’t done anything wrong. Actually the opposite is true.
If you don’t have a written warranty, laws will imply a warranty. Both under the common law for services; under the Uniform Commercial Code for goods, there are warranties that arise about your service or your product that you can’t really define. The remedies under those bodies of law for payment of money, so we think a warranty remedy is in terms fixing a problem. Redoing the service. Repair or replacing the product. Those are things that arise by contract and not by the law.
If you give a specific written warranty, then you can define the expectations what your performance standard is very easily. You can give your customers a remedy that will satisfy them. They will be more confident that your business will stand behind its work than if you didn’t have a written warranty, and you will have more assurance that you’re not going to get wrapped up in someone’s unrealistic expectations.
A written warranty is a very efficient risk management tool as well as a really good marketing tool.